ATIC to buy, fold Chartered into GlobalFoundries

Abu Dhabi's Advanced Technology Investment Co. said it has agreed to acquire Singapore-based Chartered Semiconductor Manufacturing Co. Ltd., for a total of $3.9 billion, continuing its expansion into the contract wafer production business.

Chartered will be folded into GlobalFoundries, the former manufacturing division of Advanced Micro Devices Inc. floated as a separate entity earlier this year by ATIC, which injected funds into the company under a joint venture deal with the microprocessor and graphics IC vendor.

Pooling resources from Chartered and GlobalFoundries will enable the new company to better compete in the tough wafer supply industry with market leader Taiwan Semiconductor Manufacturing Co. Ltd. The combined entity will benefit from GlobalFoundries' technology expertise while tapping into Chartered's customer base to boost sales.

"Given the importance of scale and the need for substantial, continued capital investment, and having carefully assessed all strategic options available to Chartered, we believe this transaction provides Chartered shareholders the opportunity to realize their investment," said Jim Norling, chairman of the board of directors at Chartered, in a statement. "In addition, it enables Chartered to accelerate its goal of becoming a leading player in the semiconductor industry."

GlobalFoundries CEO Doug Grose will head the combined company while Chia Song Hwee, CEO of Chartered is expected to serve as chief operating officer. Temasek Holdings, the Singapore government controlled investment outfit that controls more than 60 percent of Chartered, has "signed an irrevocable undertaking to vote in support of the transaction," the company said in the statement.

ATIC said it will pay Chartered shareholders a total of $1.8 billion and assume responsibility for debts and convertible redeemable preference share of "approximately $3.9 billion."